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The Co-operative Bank unnerved customers and the financial markets yesterday
by announcing that it would no longer offer new loans to business customers.

The highly unusual move is the latest blow for the troubled institution,
already reeling from a six-notch downgrade of its credit rating by Moody’s
two weeks ago. The rating agency warned that the Co-op could need taxpayers’
money to plug a capital shortfall.

Co-op Bank bonds have lost 30 per cent of their value in recent weeks.

The move frightened investors and revived memories of the decision by Alliance &
Leicester, which announced in 2008 that it